New ventures often bomb because they execute ideas that customers don’t care enough about or because the business model turns out to be unsustainable. These failures are entirely preventable by focusing on the search for the right value proposition and business model before focusing on their execution.
The right value propositions, business model, as well as their flawless execution are all required for success. However, you need to nail the first two, before turning your focus to execution. After all, executing a bad idea really well is really not a very good idea. It is important to understand the difference between “search” and “execution” since they require a very different attitude and skill set.
The ‘Search’ Phase
"Search" means producing market evidence that your idea is going to work. It's easy to fall in love with an idea, refine it, and write lengthy business plan, then execute. The problem with that is that refining an idea and thinking hard about it is not going to make it the right thing to do. When you skip search, you risk ending up executing the wrong thing well.
Putting all your energy in executing an unproven idea is called "premature scaling" and can kill your business. Investing in the 'search' phase will help you substantially reduce the risk of failure. This means you need to continuously design prototypes, test them in the field with experiments, capture your learnings and redesign accordingly. You exit this loop when you have sufficient evidence that your ideas could work.
Goal: Find evidence that shows an idea could work.
Attitude: Explore, experiment, learn and evolve. Iterative.
Skills: Ability to deal with ambiguity, customer empathy and listening skills, pattern recognition.
The ‘Execution’ Phase
You start the ‘execution' phase when you can show evidence of three things. First, you're addressing something customers care about. Second, you're value propositions is attracting users/and or customers. Third, you're onto a profitable and scalable business model. We call these the three kinds of fit.
"Execution" means turning ideas into a real business. In other words, you start seriously investing in marketing to acquire customers and you build the infrastructure to service them. During this scaling phase your business model and value propositions will not change substantially.
Goal: Turn a tested idea into a operational business and grow.
Attitude: Plan, implement, and manage. Sequential.
Skills: Planning, leadership, project management, ability to scale.
Traditional Product and Technology Research (R&D) is NOT "search"
Companies spend a lot of money on product and technology research. Yet, little of that investment is dedicated to "search". Few companies have processes and budgets to design, test, and evolve value propositions and business models.
The most impressive technologies and products will fail without a value proposition that customers want, embedded in a profitable and scalable business model. Why not earmark part of the R&D budget for the "search"?